A high ROAS does not guarantee profit, and a low cost per click does not necessarily mean high-quality traffic. Evaluate advertising alongside product margins, average order value and returns.
ROAS and the break-even point
ROAS is the ratio of advertising revenue to advertising spend. To determine an acceptable target, calculate gross margin and all variable costs.
- Separate branded and non-branded demand.
- Account for cancellations and returns.
- Compare performance against your target margin.
Conversion rate and landing pages
If ads attract clicks but no purchases, the problem often lies after the click: an unconvincing product page, expensive shipping, difficult checkout or a technical error.
- Review conversion rates by device and country.
- Test the journey from product page to purchase.
- Match the search query to the landing page.
CPA and profit per order
Compare the cost of acquiring an order against available margin, rather than average revenue. Different product groups can support different CPAs.
- Send the actual purchase value.
- Group products by margin.
- Exclude products that are clearly unprofitable.
When to scale
Increase the budget after collecting consistent data, verifying tracking and confirming that fulfillment can handle growth. Adjust your budget gradually.
- Do not base decisions on a single day.
- Account for conversion delays.
- Monitor search terms and your product feed.